Los Angeles Meat and Provision Drivers Union, Local 626 v. United States/Opinion of the Court

The appellants are a Los Angeles labor union, one of its business agents, and four self-employed independent contractors, so-called 'grease peddlers,' who were members of the union. They appeal from a judgment entered against them by a Federal District Court in a civil action brought by the United States to terminate violations of § 1 of the Sherman Act. The judgment was entered upon findings based upon a detailed stipulation of facts in which the appellants admitted all the allegations of the complaint and agreed to the ultimate conclusion that they had unlawfully combined and conspired in unreasonable restraint of foreign trade and commerce in yellow grease. In the stipulation the appellants also agreed to the issuance of a broad injunction against them. The District Court's decree enjoined in specific detail the practices found to be unlawful, and in addition ordered the union to terminate the union membership of all self-employed grease peddlers. 196 F.Supp. 12. The appellants attack the judgment here upon the single ground that the District Court was in error in ordering termination of the union membership of these independent businessmen. Consideration of this claim requires a somewhat detailed review of the nature of the illegal conspiracy in which the appellants in this case were concededly engaged.

During the period between 1954 and 1959 there were in Los Angeles County eight firms engaged as processors in the production of yellow grease, an inedible grease produced by removing moisture and solid impurities from so-called restaurant grease-waste grease resulting from the preparation of food in restaurants, hotels and institutions. A substantial part of the yellow grease so produced was sold to overseas purchasers and to purchasers in California for prompt shipment overseas.

The processors procured restaurant grease in two separate ways. They made direct purchases, usually from large restaurants, hotels and other institutions, and in these transactions the processors picked up the restaurant grease from the sellers through employees who were members of the union. Restaurant grease from other sources was usually purchased by the processors from grease peddlers, independent entrepreneurs whose earnings as middlemen consisted of the difference between the price at which they bought the restaurant grease from various sources and the price at which they sold it to the processors, less the cost of operating and maintaining their trucks. There were some 35 to 45 grease peddlers in the Los Angeles are.

In 1954 most of the grease peddlers became members of the appellant union, at the instigation of the appellant business agent, for the purpose of increasing the margin between the prices they paid for grease and the prices at which they sold it to the processors. To accomplish this purpose, fixed purchase and sale prices were agreed upon and enforced by union agents through the exercise or threatened exercise of union economic power in the form of strikes and boycotts against processors who indicated any inclination to deal with grease peddlers who were not union members. The union's business agent allocated accounts and territories for both purchases and sales among the various grease peddlers, who agreed to refrain from buying from or soliciting the customers of other peddlers, and violations of this agreement could result in a grease peddler's suspension from the union, in which event he was, of course, prohibited from carrying on his business.

From 1954 to 1959 this basic plan of price fixing and allocation of business was effectively carried out by elimination of the few peddlers who had not joined the union, and by coercion upon the processors through threats of 'union trouble' if they did not comply.

Within the union the grease peddlers were treated as a separate group, distinct from the some 2,400 employee members. The meetings of the grease peddlers were always held apart from regular union meetings, and from 1955 on, the grease peddlers were members of a special 'subdivision' of the union-Local 626-B. The affairs of this separate subdivision were administered not by regular union officers, but by the appellant business agent who had originated the scheme, together with a committee of grease peddlers to assist in 'policing, enforcing and carrying out the program to suppress and eliminate competition.'

There was no showing of any actual or potential wage or job competition, or of any other economic interrelationship, between the grease peddlers and the other members of the union. It was stipulated that no processors had ever substituted peddlers for employee-drivers in acquiring restaurant grease, or had ever threatened to do so. The stipulation made clear that the peddlers and the processors had essentially different sources of supply and different classes of customers. Based on these stipulated facts, the District Court affirmatively found that 'there is no competition between (the employee and peddler) groups because each is engaged in a different line of work * *  * .'

Pointing out that 'the stipulated facts clearly show that before the grease peddlers joined the defendant Union, there was no suppression of competition among them, and that only the support of the Union and the powerful weapons at its command enabled the peddlers and the Union together to destroy free competition in the purchase and sale of waste grease,' the District Court concluded that 'a decree terminating the membership of the grease peddlers in defendant Union appears to be the most effective, if not the only, means of preventing a recurrence of defendants' unlawful activities.' The court further concluded that nothing in the Clayton Act or the Norris-LaGuardia Act prevented the issuance of a decree divesting the grease peddlers of union membership in the circumstances of this case. We agree with these basic conclusions.

It is beyond question that a court of equity has power in appropriate circumstances to order the dissolution of an association of businessmen, when the association and its members have conspired among themselves or with others to violate the antitrust laws. Hartford-Empire Co. v. United States, 323 U.S. 386, 428, 65 S.Ct. 373, 393, 89 L.Ed. 322. And the circumstances stipulated and found in the present case provided ample support, we think, for a decree of dissolution, as a matter of the discreet exercise of equitable power.

It is also beyond question that nothing in the anti-injunction provisions of the Norris-LaGuardia Act, nor in the labor exemption provisions of the Clayton Act, insulates a combination in illegal restraint of trade between businessmen and a labor union from the sanctions of the antitrust laws. Allen Bradley Co. v. Local Union No. 3, 325 U.S. 797, 65 S.Ct. 1533, 89 L.Ed. 1939. Indeed, the appellants have conceded the propriety of the order in the present case which broadly enjoins the illegal practices in which they were engaged.

The narrow question which emerges in this case, therefore, is whether businessmen who combine in an association which would otherwise be properly subject to dissolution under the antitrust laws can immunize themselves from that sanction by the simple expedient of calling themselves 'Local 626-B' of a labor union. We think there is nothing in the Norris-LaGuardia Act nor in the Clayton Act, nor in the federal policy which these statutes reflect, to prevent a court from dissolving the ties which bound them to the appellant union, in the circumstances of the present case.

The provisions of the Norris-LaGuardia Act place severe limitations upon the issuance of an injunction by a federal court in 'any case involving or growing out of any labor dispute,' and the statute specifically forbids a District Court in such a case to prohibit anyone from '(b)ecoming or remaining a member of any labor organization.' But, as the District Court correctly found, the present case was not one 'involving or growing out of any labor dispute,' but one involving an illegal combination between businessmen and a union to restrain bound these businessmen together, and commerce. In such a case, as Allen Bradley Co. clearly held, neither the Norris-LaGuardia Act nor the labor exemption provisions of the Clayton Act are applicable.

This Court's decision in Columbia River Packers Assn. v. Hinton, 315 U.S. 143, 62 S.Ct. 530, 86 L.Ed. 750, is very much in point. That was a private antitrust suit brought by a processor of fish to enjoin an allegedly illegal combination of fishermen, who had joined together in the Pacific Coast Fisherman's Union to regulate the terms under which fish would be sold. The organization was 'affiliated with the C.I.O.' 315 U.S. at 144, 62 S.Ct. 520. The defendants claimed that an injunction against them would violate the Norris-LaGuardia Act. The Court held that the controversy was not a 'labor dispute' within the meaning of the Norris-LaGuardia Act, pointing out that that statute was 'not intended to have application to disputes over the sale of commodities.' 315 U.S., at 145, 62 S.Ct., at 521, 522. Here, as in Columbia River Assn., the grease peddlers were sellers of commodities, who became 'members' of the union only for the purpose of bringing upon power to bear in the successful enforcement of the illegal combination in restraint of the traffic in yellow grease. The District Court was not in error in ordering the complete termination of that illegal combination.

What has been said is not remotely to suggest that a labor organization might not often have a legitimate interest in soliciting self-employed entrepreneurs as members. Cf. Milk Wagon Drivers' Union v. Lake Valley Farm Products, 311 U.S. 91, 61 S.Ct. 122, 85 L.Ed. 63; Bakery and Pastery Drivers and Helpers Local 802 of International Brotherhood of Teamsters v. Wohl, 315 U.S. 769, 62 S.Ct. 818, 86 L.Ed. 1178; Local 24 of Intern., etc. v. Oliver, 358 U.S. 283, 79 S.Ct. 297, 3 L.Ed.2d 312. And both the Norris-LaGuardia Act and the Clayton Act ensure that the antitrust laws cannot be used as a vehicle to stifle legitimate labor union activities. But here the court found upon stipulated facts that there was no job or wage competition or economic interrelationship of any kind between the grease peddlers and other members of the appellant union. If that situation should change in the future, the District Court will have ample power to amend its decree.

Affirmed.

Mr. Justice GOLDBERG, with whom Mr. Justice BRENNAN joins, concurring.

I concur in today's opinion and judgment of the Court because the absence here of any countervailing union interest in retaining the grease peddlers as members coupled with the egregious nature of the conduct involved supports the District Court's exercise of discretion in imposing the contested sanction as the 'most effective * *  * means of preventing a recurrence of defendants' unlawful activities.' Page 98 of 371 U.S., page 165 of 83 S.Ct., supra. As I read the stipulated record, the peddlers did not act and were not viewed by the union as participants in normal union activities designed to better their economic condition, but instead were from the very beginning used by union officials to effect a concededly illegal scheme to control the distribution and processing of grease.

This does not mean, and I do not regard the opinion of the Court as saying, that members may be expelled from a union when the pursuit of genuine labor objectives has collaterally resulted in transgressions of the antitrust laws.

The relief given by the District Court is not inconsistent with these expressions. To support its order, however, that the union must terminate the membership of the grease peddlers, the court below reasoned that the expulsion was appropriate and justified because, in the absence of job or wage competition between the peddlers and other union members, the peddlers were not proper subjects of unionization. In reaching this conclusion, the court below too narrowly circumscribed the permissible area of legitimate labor union activity. To believe that labor union interests may not properly extend beyond mere direct job and wage competition is to ignore not only economic and social realities so obvious as not to need mention, but also the graphic lessons of American labor union history.

Today's opinion of the Court thus properly notes that a labor organization may 'often have a legitimate interest in soliciting self-employed entrepreneurs as members' and recognizes that permissible union interest and action extends beyond joy and wage competition to other 'economic interrelationship(s).' Page 103 of 371 U.S., page 167 of 83 S.Ct., supra. In my view, there is therefore implicit in this Court's opinion a rejection of the District Court's overly strict view that job or wage competition is the sole measure of the propriety of union organizational efforts.

Notwithstanding what I take to be its disapproval of the views of the district judge, the Court correctly sustains the judgment expelling the peddlers from membership in the union, not because there is absent the job or wage competition erroneously considered crucial by the District Court, but because there does not appear in this record any other legitimate labor union interest presently being served by organization of these peddlers.

The Court is not here required to pass upon, and does not pass upon, the existence of the antitrust violation, or whether, as an original matter, the grease peddlers might properly associate among themselves or affiliate with a sympathetic and genuinely interested union to improve their economic condition. Resolution of such issues would require careful and details consideration of federal labor policy, the scope of the antitrust exemption afforded labor organizations by §§ 6 and 20 of the Clayton Act and the Norris-LaGuardia Act, as interpreted by United States v. Hutcheson, 312 U.S. 219, 61 S.Ct. 463, 85 L.Ed. 788, and, in addition, the applicability here of the doctrines enunciated by this Court in cases such as Columbia River Packers Association, Inc., v. Hinton, 315 U.S. 143, 62 S.Ct. 520, 86 L.Ed. 750, and Allen Bradley Co. v. Local No. 3, 325 U.S. 797, 65 S.Ct. 1533, 89 L.Ed. 1939. In the present case, however, appellants stipulated in the District Court that they have violated the Sherman Act and engaged in a pattern of conduct calling for remedial injunctive relief; they offered no justification for their admittedly illegal conduct. These concessions necessarily forfeit any antitrust exemption which might otherwise have been claimed to attach. Consequently, the only question remaining is whether, having thus negatived by their stipulations the existence of any exonerating legitimate union interest, appellants may now complain that the district judge abused his discretion in fashioning a remedy which included, in addition to the enjoining of future similarly illegal conduct, expulsion of the peddlers from the union. Although, as I have indicated, I do not agree with all of his views, I believe that the district judge did not exceed permissible bounds in framing the decree.

The particular nature of the challenged conduct giving rise to the ultimate illegality (whether adjudicated after contest or stipulated) is, of course, immediately and directly relevant to the nature of the relief to be decreed. Relief should be effective to preclude future violations and, at the same time, should not unduly penalize the parties. Since the conduct here goes beyond that recorded in the opinion of the Court, a brief recital of additional facts is appropriate.

The stipulated antitrust violation does not depend upon the fact of combination between the grease peddlers and the union for the purpose of bettering the economic condition of the former through limited use of collective bargaining power-an affiliation which standing alone and as an original matter might have been proper. Though not joined as defendants below, at least some of the processors purchasing grease from the peddlers were conceded to have been co-conspirators. The union business agent openly allocated sales among the processors and certain processors were completely cut off from sources of supply. On at least one occasion, processors were required to submit information concerning the volume of their grease purchases and the data supplied was used by the union as a basis for ordering an equalizing shift of business to a processor owned by a union member. Only a month earlier, the union business agent had arranged for a competitor to 'help out' this same favored processor by selling for it grease which it was having trouble selling. The accommodating processor undertook the sale simply because it feared 'trouble' with the union and its agent if it refused.

By virtue of the union's activities, the peddlers' sales of grease were ultimately wholly diverted from the six processors originally dealing with the peddlers to two processors, one of which was owned by a union member and in the other of which a union member was a partner. In the course of accomplishing this shift of business, at least one noncooperative processor was forced out of business.

Such facts-all of which were stipulated-demonstrate a pattern of allocation of sales among processors and other improper practices designed to benefit certain favored processors in which union members had a direct financial interest.

Moreover, as indicated in the opinion of the Court, appellants stipulated that the peddlers themselves are 'independent businessmen' and not 'employees' of the processors. We cannot overlook the force of these concessions. This case is unlike National Labor Relations Board v. Hearst Publications, 322 U.S. 111, 64 S.Ct. 851, 88 L.Ed. 1170, in which nonemployee status was not merely unconceded, but the contrary was argued and shown. Here, the single paragraph in the stipulation of facts describing the nature of the peddlers' activities does not overcome the ultimate stipulation that they were 'businessmen' and not 'employees.' Certainly we should not, merely by mechanically affixing naked labels imported from other contexts, decide cases on abstractions; but we cannot ignore the impact of unlimited, self-made categorizations applied by agreement in the very lawsuit before us.

The import of the entire stipulated factual record is that the union neither had nor pursued any legitimate present interest in organizing the grease peddlers. Were it otherwise, that portion of the decree compelling expulsion of the peddlers from the union, in my view, could not stand. The sanction here invoked is an extreme one, and, unless confined to use but rarely and then only in the most compelling of circumstances, may become a device for unfairly and improperly fractionalizing or decimating unions.

On the circumstances presented to the Court, the judgment below is properly affirmed. The situation may change, however, and I understand the opinion of the Court to say that if a legitimate union interest in organizing the peddlers does hereafter arise, the District Court has the power, and indeed the duty, to modify the decree on application of the appellants. For these reasons, I join in the opinion of the Court.

Mr. Justice DOUGLAS, dissenting.